How UnitedHealth Group grew bigger than the nation’s largest banks
UnitedHealth Group has the highest price per share of any company in the Dow Jones Industrial Average and is the 10th-highest-performing stock in the S&P 500.
In fact, UnitedHealth is not only the largest healthcare company in the United States by market cap and revenue, it’s even larger than JPMorgan Chase, the country’s largest bank.
And it’s a Wall Street darling, and pundits are optimistic about the company’s future: 22 out of 25 analysts currently rate it a Buy.
“If I had to pick one stock, just one stock to buy, I would buy United[Health]said Ana Gupte, director at AG Health Advisors.
UnitedHealth “has outperformed everyone else’s stock for two reasons,” said Lance Wilkes, chief executive and senior research analyst at Bernstein Research. “One would be strategic vision and the other would be strategic capital management.”
UnitedHealth has grown its annual revenue by more than $100 billion since 2012, adjusted for inflation. This was achieved through a unique acquisition strategy. It started with smaller deals that grew in size while many of UnitedHealth’s competitors like Aetna and Humana or Anthem and Cigna tried to broker much larger deals, only to be stymied by regulators.
Conversely, UnitedHealth pursued a strategy of vertical integration, buying up smaller companies and incorporating them into its growing healthcare business.
UnitedHealth’s size makes it “relatively immune to economic cycles” due to the company’s great diversity, Gupte said. “That makes it very attractive from an economic and macroeconomic perspective.”
Until recently, its acquisition strategy enabled it to grow without the company being overly scrutinized by regulators. But in January 2021, UnitedHealth and Change Healthcare announced a nearly $8 billion cash deal that was challenged by the Justice Department over antitrust concerns.
Healthcare companies “are growing [like] utilities,” Wilkes said. “As a result, I think they’re going to have very large market shares because … they don’t want redundant services through the system.”
“I think at this point, we would look at UnitedHealth Group as sort of…essential healthcare infrastructure at this point in America,” said Matt Stoller, director of research at the American Economic Liberties Project and author of “Goliath: The Hundred.” Annual war between monopoly power and democracy. “It’s too big to manage.”
“UnitedHealth Group is committed to improving the healthcare system for all, driving evidence-based practices and aligning incentives across the system to ensure people get the right care in the right place at the right time,” UnitedHealth Group told CNBC.
“Because we serve people in all aspects of the healthcare system, we have a unique ability to identify opportunities to better integrate care and services, design solutions, and deploy them at scale to improve access, reduce costs, and improve health outcomes improve the experience for patients and providers.” ,” it said.
Watch them Video Find out above how UnitedHealth Group grew and what it means for the US healthcare system.